The Washington PostDemocracy Dies in Darkness

What Tom Friedman got wrong about India’s economy — and America’s

The world may be flatter, but not for the better

A daily wage laborer works at a wholesale market in Delhi in July. (Anindito Mukherjee/Bloomberg)
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The 2005 international bestseller “The World Is Flat” opened with the author Thomas L. Friedman standing on the first tee at a golf course in Bangalore, long considered India’s Silicon Valley. Staring out at the IBM and Microsoft buildings lining the course, he shared his thoughts on the opportunities tech and telecom would bring to Indian laborers. The playing field had been leveled. The “American Dream” had arrived in India.

But 15 years later, it’s clear that Friedman got the story wrong. Rather than finding greater independence, earning competitive wages and steadily moving up the social ladder, for most Indian workers, nothing changed. The change, if there was one, occurred in the United States. The labor trends that had long shaped Indian society — precarious work, menial tasks, low pay — were, over time, increasingly becoming staples of the U.S. economy. Globalization 3.0, as Friedman called it, hadn’t flattened the world by broadening prosperity. Instead, it reinforced a structure whereby the rich exploited the poor.

Just as Francis Fukuyama declared an “end” to history with the collapse of the Berlin Wall, Friedman effectively declared an “end” to economics with the fall of India’s “License Raj,” which for decades had imposed arcane rules and regulations on private business, impeded growth and limited opportunities at the lowest rungs of society. The story he tells is familiar in pro-business circles. In 1991, under pressure from the International Monetary Fund and the World Bank, the finance minister devalued the national currency, lowered tariffs on imported goods and services and exposed industry to outside competition. Soon the economy stabilized, and with it, India proved itself a viable market for investment with its English-speaking workforce and low wages.

Friedman paid scant attention to what was happening to U.S. workers on the other side of the world. While the benefits of the postwar economy undoubtedly benefited white working-class men, by the late 1970s labor unions were just beginning to open their rolls to black workers and other groups that had been historically barred from enjoying the benefits of America’s economic dominance.

But the expansive moment didn’t last. Newly signed free-trade agreements and the opening up of markets in India, China and Latin America increased competition, driving wages down. Rather than bringing marginalized workers into the fold, unions in the United States, particularly in the private sector, collapsed.

In subsequent years, more people in India have found jobs and, in some cases, real opportunities. But the kind of jobs and opportunities on offer are hardly a pathway to prosperity. The structure of work in India has barely shifted, in fact. Today, for instance, information technology accounts for approximately 4 million jobs in India — only a million more than 2005, when Friedman’s book was published. Manufacturing, meanwhile, which serves as a useful measure of economic growth and stability, has dropped to 15 percent of GDP, even less than it was three decades ago. The vast majority of working Indians — 80 percent of the workforce — remain stuck in the informal sector, toiling away without permanent contracts, protections or guaranteed wages.

This dynamic doesn’t seem likely to change. Prime Minister Narendra Modi won national office in 2014 by promising jobs and opportunities that would somehow follow from slashing government spending, cutting personal and corporate tax rates and otherwise leaving private industry alone. He didn’t deliver.

Under Modi, India has its highest unemployment rate in 50 years, at 6.1 percent, and a youth unemployment rate nearly three times that, along with a sputtering economy registering its lowest growth rate in more than a decade. Just as President Trump uses divisive, harmful and often hateful rhetoric to his benefit, Modi has deployed racist, casteist and anti-Muslim rhetoric to serve his political purposes. Those tactics have been effective; he won reelection in a landslide, despite dangerously increasing inequality.

India’s top one percent now control 73 percent of its wealth, thanks in large part to cozy relationships between the state, corporations and business elites. Workers today must scramble in a different way, of course, typically drawing themselves closer to the rich and whatever meager compensation they might offer. In addition to chasing precarious work opportunities, ordinary Indians are in search of basic services, including quality health care, education and housing — all things the government can’t or won’t provide in an age of liberalization.

I was able to see up close what kinds of ties of dependence follow from this scenario while studying the poor and mostly lower-caste caddies who work at the golf club where Friedman played his afternoon round. Not quite employees, but not quite contract workers, these caddies worked for tips — whatever club members deemed appropriate for their time and effort, usually no more than $3 to $5 a round, cash in hand. It was never enough, so they had to ask for more to put food on the table, pay down high-interest loans and send children to school. After 10 years of research, it was obvious to them and me that their children weren’t necessarily in a position to land a better job.

Other workers, including maids, cooks, drivers, gardeners, waiters and security guards, are similarly weighed down with low wages and few opportunities. This kind of dependence on the rich by the poor is on display everywhere in India — and it’s becoming more widespread in the United States, too. Though unemployment is low, so too are wages, a combination that feeds certain impulses. One is the obligation to seek out additional work. The other is to transform oneself into someone ready to perform servility and deference.

As the third printing of Friedman’s book hit bookshelves, the gains from the 1990s dot-com boom had gone bust. Americans who had been encouraged by President George W. Bush to borrow and spend in the aftermath of the Sept. 11, 2001, attacks on the United States had done just that, taking on debt to pay medical bills, send children to college and buy homes. None of this was sustainable on wages that hadn’t risen in four decades. When the world economy collapsed in autumn 2007, foreclosures, bankruptcies and applications for poverty relief increased.

Americans went in search of alternative means of income, working two or three jobs in a “gig” economy that offered no benefits or protections and often put workers in the service, if not servitude, of much wealthier people. Jobs originally billed as a stopgap measure to keep people afloat in tough times proliferated; today 60 million Americans find work in this part of the economy. Within 10 years, a majority of all work in the country will be on a contract basis, with people holding jobs that look like caddie labor in India.

Trump speaks to these strains — though with sympathy only for white workers. Both he and Modi exploit existing racial and caste fissures, promising historically advantaged sections of working-class communities a return to a mythic past, while running their respective economies on the advice of CEOs who prefer their workers pliable and, ultimately, easy to dismiss.

The world has flattened, in sum, but not always for the better. Even so, labor movements of the past can offer inspiration. The eight-hour work day, maternity leave, minimum wages and basic rights in the workplace — none of it would have come about if not for workers and their families organizing for change. Such lessons can be tough to square in the here and now, where Uber, Amazon and a host of other companies don’t even recognize a formal relationship with the people who drive people and deliver products.

But it’s not impossible. The privations of our moment are breathing life into the labor movement, at least in the United States, where ideas such as universal health care, free college and a higher minimum wage are extremely popular. If such worker-friendly policies can be enacted here, the benefits would redound to American workers — and perhaps offer lessons to other countries about what is possible in a global economy.

Without big ideas — and big changes — workers in the United States and India alike will continue to face a global economy where the playing field looks nothing like anything Friedman predicted, but instead one where opportunities to rise up and gain stability are diminished.